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Use of policy tools to protect SACU poultry sectors raises trade policy issues

13 January 2013

According to poultry industry press sources, following the establishment by Namibian Poultry Industries (NPI) of a large-scale poultry facility 30 km north of Windhoek, behind a wall of infant industry protection, the Namibian president has called for an expansion of production for export to other African countries. The installed facility currently produces 250,000 chickens per week, but has been designed with an ultimate capacity of 500,000 chickens per week ‘if expansion is required later’, according to the CEO of the parent company Namibia Mills Investments (NMI).

The initial focus of activities, however, is on production of high-quality chicken products and the development of a local skills base for poultry industry development. Currently, some 18 expatriate staff are employed, given the shortage of local staff with the technical skills necessary to conduct ‘the numerous laboratory tests that need to be done’.

According to other press sources, the poultry dispute between Brazil and South Africa rumbles on, following the introduction by South Africa of anti-dumping surcharges on Brazilian poultry meat in February 2012. This saw surcharges of 63.93% and 46.59% added to existing duties of 5% and 27%, applied to ‘whole chickens’ and ‘boneless cuts’ respectively. Francisco Turra, President of the Brazilian Poultry Association (União Brasileira de Avicultura - UBABEF), maintains that UBABEF ‘will go to the end to prove that we do not practice dumping in South Africa or in any other market where we operate’. According to analysis published by USDA in August, South Africa was the seventh largest market for Brazilian poultry meat exports in 2011 (195,416 tonnes).

Angola too is investing in poultry production, according to online reports, which state that US$49 million has been invested by the South Korea Exim Bank in a poultry project in the Angolan province of Kwanza Norte. The project includes ‘120 sheds each housing 5,000 birds and a hatchery able to incubate 2 million eggs per 45-day production cycle…a feed factory with a production capacity of 5,000 tons per month and an abattoir capable of slaughtering 4,000 birds per hour’. The Angolan government is also aiming to reach 50% self-sufficiency in egg production by 2015, according to the reports from the Angolan Press Agency. 

Editorial comment

Calls from Namibian President Pohamba in October 2012 for a further expansion of Namibian Poultry Industries’ production for export to other African countries, raise the issue of the implications of infant industry protection for the competitiveness of exports. The trend towards increasingly large poultry production units aimed at gaining economies of scale means that, behind high levels of tariff protection, production can be built up with a surplus for export, with higher domestic prices enabling competitive export pricing. This, however, can be seen as distorting trade.

The move to build up economies of scale within the infant industry protection phase need to be seen in the light of the situation on the EU market, where the relative price advantage of poultry meat over other meats has meant that poultry meat consumption has increased at the expense of beef and pork during the economic downturn. With imports into the EU largely taking place within tariff-rate quota arrangements (thereby limiting supplies of poultry meat to the EU market), this has enabled EU poultry producers to pass on input costs increases to consumers. This in turn has enabled EU exporters to maintain their price competitiveness on overseas markets. The higher-value cuts sold in the EU at higher prices have meant that the prices of lower-quality export cuts can be kept stable.

Between 2009 and 2011, EU poultry meat exports rose by 38.5% and were forecast in the EC’s September 2012 report, ‘Short term outlook for arable crop, meat and dairy markets’, to increase by 5% in 2012 and a further 1.2% in 2013.

With South Africa using safeguard duties against Brazilian and US-sourced poultry meat and Namibia invoking infant industry protection against South Africa, important issues are raised in the context of the regional trade integration initiatives under way in Southern Africa in the SADC FTA and tripartite FTA negotiations. Other facets illustrating the central issues are the concerns of Zambian poultry producers over government plans to allow increased imports of chicken meat (see Agritrade article ‘ EU 2011 annual review shows growing EU poultry exports’, 20 May 2012), the strong financial performance of South African poultry companies, and ongoing investigations by the competition authority into business practices in the South African poultry sector (see Agritrade article ‘ Balancing consumer and producer interests in the poultry sector’, 25 March 2012).


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